Maximum interest rates and loan fees explained
The National Credit Act caps what a lender may charge: personal loans can cost at most the repo rate plus 21% a year, which is 28.25% at today’s 7.25% repo rate, plus capped fees and credit life cover.
How the caps work
Since 6 May 2016, the maximum interest rate for most credit is the Reserve Bank’s repo rate plus a fixed margin. When the repo rate changes, the caps change with it. The repo rate is 7.25% after the September 2026 increase.
| Type of credit | Maximum interest rate | At 7.25% repo |
|---|---|---|
| Home loans (mortgage agreements) | Repo + 12% a year | 19.25% |
| Credit cards, store cards, overdrafts (credit facilities) | Repo + 14% a year | 21.25% |
| Personal loans (unsecured credit) | Repo + 21% a year | 28.25% |
| Developmental credit (small business, low-income housing) | Repo + 27% a year | 34.25% |
| Other credit agreements (such as most vehicle finance) | Repo + 17% a year | 24.25% |
| Short-term credit (up to R 8 000, repaid within 6 months) | 5% a month on the first loan; 3% a month on later loans in the same year | 5% / 3% a month |
| Incidental credit (late payment on an account) | 2% a month | 2% a month |
The cap that applies is set by the repo rate when the agreement is made; on a variable-rate loan it moves with repo. Agreements signed before 6 May 2016 still follow the older formulas.
Fee caps
| Fee | Maximum (excluding VAT) | Including 15% VAT |
|---|---|---|
| Initiation fee: home loan | R 1 100 + 10% of the amount above R 10 000, at most R 5 250 | R 6 037.50 |
| Initiation fee: personal loans, credit cards and other credit | R 165 + 10% of the amount above R 1 000, at most R 1 050 | R 1 207.50 |
| Monthly service fee | R 60 | R 69 |
You can choose to pay the initiation fee upfront instead of adding it to the loan, so you don’t pay interest on it.
Credit life insurance
A lender may require credit life cover for the loan, but the cost is capped at R 4.50 a month per R 1 000 of the amount owed (R 2 per R 1 000 on home loans). The cover must pay off the debt if you die or are permanently disabled and pay instalments for a period if you lose your job or can’t work. You may not be sold retrenchment cover if you are not employed, and you have the right to use your own existing policy instead.
What a personal loan at the cap costs
Take a R 30 000 personal loan over 36 months at the maximum 28.25%, with the maximum R 1 207.50 initiation fee added to the loan:
- Amount financed: R 31 207.50.
- Instalment: R 1 295.07 + R 69 service fee = R 1 364.07 a month, before credit life.
- Credit life at the cap would add up to about R 140 in the first month, falling as the balance drops.
- Over 36 months you repay about R 49 107 before credit life, for R 30 000 borrowed.
A loan at 18% with the same fees would cost about R 1 197 a month instead: a difference of more than R 6 000 over the term. Use the personal loan calculator to compare quotes.
The in duplum rule
Section 103(5) of the National Credit Act stops arrears from growing without end. While you are in default, interest, fees, credit insurance and collection costs added together can’t exceed the unpaid balance at the time you defaulted. Once they reach that amount, no further interest or charges can be added for as long as you remain in default, even if you make payments.
Check your quote
- You are entitled to a pre-agreement statement and quote. It stays valid for 5 business days.
- Check the interest rate is at or below the cap for that type of credit.
- Check the initiation fee (at most R 1 207.50 including VAT on a personal loan) and the monthly service fee (at most R 69).
- Check the credit life premium is no more than R 4.50 per R 1 000 a month.
- Compare the total cost of credit across lenders, not only the instalment.
Reckless lending
Lenders must assess whether you can afford the loan, using proof of income and your existing debt. A loan granted without an assessment, or one that makes you over-indebted, can be declared reckless, and a court can suspend it or set it aside.
If you were overcharged
- Complain in writing to the lender and keep a copy.
- If that does not resolve it, go to the National Financial Ombud Scheme (NFO), which handles banking and credit complaints for free.
- You can also complain to the National Credit Regulator, which can refer a lender to the National Consumer Tribunal.
Frequently asked questions
What is the maximum interest rate on a personal loan in South Africa?
The repo rate plus 21% a year: 28.25% at a repo rate of 7.25%.
What is the maximum interest on a credit card?
The repo rate plus 14% a year: 21.25% at a repo rate of 7.25%.
What is the maximum initiation fee on a personal loan?
R 1 050 excluding VAT, which is R 1 207.50 including VAT.
Do the caps change when the repo rate changes?
Yes. The interest caps are set as repo plus a margin, so they rise and fall with each Reserve Bank decision.
Related calculators
Personal Loan Calculator
Instalment and total cost of a personal loan.
Open calculator →CALCULATORLoan Comparison Calculator
Compare two loan quotes side by side.
Open calculator →CALCULATORCredit Card Payoff Calculator
How long to clear a card balance.
Open calculator →Interest and fee caps from the Review of Limitations of Fees and Interest Rates Regulations (GN 1080 of 2015, in force 6 May 2016) and NCR Circular 8 of 2016; credit life from the NCR: Credit Life Insurance Regulations; quotes from National Credit Act, section 92; complaints from the National Financial Ombud Scheme. Repo rate as at the SARB MPC decision of 23 September 2026. Checked 19 October 2026; the caps move with every repo rate change. General information, not tax, legal or financial advice.